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Late last year, Asia Confidential made a seemingly outrageous call: that junior gold miners would likely prove the great contrarian trade of 2014. At the time, these stocks were the most hated assets on the planet. By a distance. But valuations were at more than decade lows. And many companies were addressing shareholder concerns by booting out bad management, cutting costs and overly-aggressive capital expenditure, as well as focusing more on returns on capital instead of growth. Gold prices didn't need to rise for many of these companies to provide potentially attractive returns as they were discounting US$700/ounce prices into perpetuity. Since that call, the junior gold miners ETF in the US has rebounded close to 50%.

These miners no longer offer the same compelling "deep value" buying opportunity (though still reasonable). The question for investors now is: what assets do offer such opportunities? Well, Russian stocks may qualify given Ukraine worries have driven market valuations down to a seemingly cheap 5x price-to-earnings ratio. Though tread carefully given earnings and book values have been "juiced" by a 13-year oil bull market. Copper miners may be worth a look also given the extraordinary price action in the copper price of late.

Our focus today though is whether China stocks qualify as potential opportunities following their recent correction. It's our view that these stocks do offer attractive prospective returns. Not outstanding, but attractive. In other words, long-term investors should consider accumulating them at current levels.

Yes, China's economy is deteriorating. I've been consistently negative on this economy over the past 18 months. But the argument here is that a credit bust is now largely factored into stock prices. The Chinese stock market is down two-thirds from 2007 highs, investor sentiment is at multi-year lows, valuations are close to decade lows and bank prices have more than discounted a crisis.

Sure, there are plenty of risks to this call. Stock market corrections normally end with sharp falls and that may be ahead of us. Events such as further trust loan defaults and a serious property downturn (the next domino to fall) could further dent investor confidence. And the list goes on. Ultimately, however, these risks need to be weighed against the price on offer. In the case of Chinese stocks, the price appears reasonable.

The bear caseThe bear case for China stocks is an easy one to make. As almost everyone is making it, I'm not going to bore you with all the gory details. Suffice to say, the case largely rests on these key factors:

1) China is undergoing a credit bust which will almost certainly worsen. As famous short-seller Jim Chanos likes to say with a hyperbolic flourish: China is Dubai 2008 multiplied by 1000.

"It's important to understand how China's economy got to be so big in a short space of time. The speed of economic ascent has no parallel in modern times and it's been the result of a classic export-led growth model.

What this means is that China has been able to mass produce goods on an unprecedented scale given the appetite for these goods abroad. This has helped lift industrial investment well beyond the level which would be needed if it focused solely on the domestic market. And it's been aided by a key competitive advantage on the global stage: cheap labor. The end result has been that China has been able to suppress domestic demand and pour resources into investment.

The reason why this export-led model is unsustainable is that China now produces so many goods that the rest of the world cannot possibly absorb them all. China's gotten to big for its own good, in crude terms.

When the 2008 financial crisis hit, Chinese exports plummeted and the limits of the model became apparent. However, China cushioned the blow by implementing massive stimulus measures. In effect, it sunk even more money into investments, such as infrastructure, property and factories. The problem to this day is there hasn't been the end-demand for these investments. In other words, export demand has remained soft and domestic demand for goods hasn't been able to pick up the slack.

And a bigger problem is that the much of the investments via the stimulus were debt-financed, principally to state-owned firms. These firms were deemed less risky by banks.

That's created an issue for small firms which haven't had access to bank financing. Given reduced export and domestic demand, they've had to resort to financing from outside the banks, the so-called shadow banking system. They've had to pay much higher interest rates as a consequence. And it's widely known that the collateral used for non-bank financing is less-than-solid, on average."

The reliance on debt to push economic growth has resulted in total China credit to GDP reaching 220%. That means China is now heavily dependent on credit to produce growth.

The worry is not so much the total amount of debt, but the pace at which it's been accumulating. China credit to GDP has risen by 90 percentage points over the past years, nearly 2x that of other countries prior to financial crises.

In short, history suggests rapid accumulation of credit almost always results in serious financial crises. And China's unlikely to be any different.